Savings Bonds

Savings bonds are debt securities issued by the U.S. Department of the Treasury to pay for the U.S. government’s borrowing needs. Saving bonds are considered one of the safest investments because they are backed by the full faith and credit of the U.S. government.

There are several types of U.S. savings bonds:

• Series EE Bonds These savings bonds replaced the Series E bonds. They are purchased at a discount of half their face value. You cannot buy more than $5,000 (face value) during any calendar year. EE bonds increase in value as the interest accrues or accumulates and pay interest for 30 years. When EE bonds “mature,” or come due, you are paid your original investment plus all of the interest. 
• Series HH Bonds You can purchase Series HH bonds, but only in exchange for Series EE or E bonds and Savings Notes, or with the proceeds from a matured Series HH bond. Unlike EE bonds, Series HH bonds are purchased at their face amount in $500 to $10,000 denominations, but there is no limit on the amount you can purchase. These bonds don’t increase in value and have a maturity of 20 years.
• Series I Bonds These bonds are sold at face value and grow with inflation-indexed earnings for up to 30 years. You can buy up to $5,000 in any calendar year.

U.S. savings bonds have tax advantages. You can defer federal taxes on the interest until you cash in the bond or stops paying interest at maturity. Savings bonds are also exempt from state and local taxes. Because savings bonds are registered with the U.S. Treasury’s Bureau of the Public Debt, you can get your bonds replaced if your bond is lost, stolen, or destroyed.

For more information about savings bonds, visit the website of U.S. Department of Treasury's Bureau of the Public Debt. At its site, you can use its Savings Bond Calculator to help you make more informed investment decisions about savings bonds. The website also provides a section describing the different types of securities issued by the Treasury.

http://www.sec.gov/answers/savingsbond.htm